Chile stocks jump, peso struggles after constitution vote

Article content

Chile’s stock market jumped, while its

peso struggled for direction on Monday after voters rejected a

Article content

progressive new constitution, while other regional peers in

Latin America traded mixed against a higher dollar.

The Andean country’s stocks jumped as much as

5% to an all-time-high, before paring some losses, while the

currency slipped 0.3% after leaping more than 4% against

the dollar as Chileans voted against a proposed new constitution

on Sunday, rejecting what would have been one of the world’s

Advertisement 2

Article content

most progressive charters.

The referendum was also seen as an evaluation of the

government, which is struggling with buoyant inflation, an

economic slowdown and an internal security crisis, according to


After acknowledging defeat, President Gabriel Boric pledged

to make adjustments in his government team and work with

Congress to draft a new text. Center-left and right-wing parties

have also agreed to negotiate.

“Given that the overwhelming rejection of the new

constitution has weakened the government, it’s possible that any

new or reformed constitution will address some of the most

contentious aspects (e.g. around property rights),” said

Kimberley Sperrfechter, assistant emerging markets economist at

Advertisement 3

Article content

Capital Economics.

“If the process is quick… we could see Chilean financial

assets rebound on a more sustained basis. But if this is the

beginning of a long-winded process and uncertainty drags on,

it’s likely that Chilean assets come under renewed pressure.”

“The peso looks particularly vulnerable given Chile’s very

large current account deficit,” she added.

Meanwhile, Colombia’s peso rose 0.5%. Consumer prices

rose 1.02% in August, taking cumulative 12-month price growth in

the country to a decades-long high of 10.84%.

Brazil’s real edged 0.2% higher in volatile trading,

while Mexico’s peso slipped 0.3%.

Mexican inflation is forecast to have accelerated in August

to its highest level in over 21-1/2 years, a Reuters poll showed

Advertisement 4

Article content

on Monday, boosting bets the Bank of Mexico will continue hiking

its key interest rate through the rest of the year.

Mexican President Andres Manuel Lopez Obrador said he will

hold a meeting with his cabinet members to strengthen the

country’s anti-inflation plan.

Central bank decisions from Chile and Peru are due this


Meanwhile, Argentina’s central bank is set to hike the

country’s interest rate as early as this week, a source said,

after the economy ministry rolled out a preferential exchange

rate for soybean farmers dubbed the “soy dollar” in a bid to

promote exports.

Argentina is the world’s biggest soy oil and meal exporter

as well as the No. 3 exporter of raw soybeans and this incentive

will allow soy farmers to convert their earnings to local

Advertisement 5

Article content

currency at 200 pesos per dollar, far higher than the official

rate of 140 pesos.

The tightly controlled official peso fell 0.8%,

while in informal market it surged more than 7%.

Key Latin American stock indexes and currencies at 1911 GMT:

Stock indexes Latest Daily % change

MSCI Emerging Markets 968.19 -0.39

MSCI LatAm 2192.26 1.37

Brazil Bovespa 112088.57 1.1

Mexico IPC 45942.97 0.12

Chile IPSA 5799.08 2.58

Argentina MerVal 138454.68 1.579

Colombia COLCAP 1238.14 0.42

Currencies Latest Daily % change

Brazil real 5.1529 0.61

Mexico peso 19.9976 -0.34

Chile peso 880 0.28

Colombia peso 4457.95 0.48

Peru sol 3.8786 -0.34

Argentina peso (interbank) 140.1500 -0.80

Argentina peso (parallel) 266 7.14

(Reporting by Anisha Sircar, Devik Jain and Susan Mathew in


Editing by Alistair Bell)



Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Source link

Comments are closed.